Public Bill Committee

[Ann Winterton in the Chair]

Clause 23 ordered to stand part of the Bill.

Stephen Hammond: On a point of order, Lady Winterton. I seek your advice on the tabling of amendments. As we all know, we have had a bank holiday, and a number of people were hoping to table amendments to the latter parts of the Bill in the normal way. If they are tabled today, they will clearly be starred amendments. Would you would look favourably on such amendments?

Ann Winterton: The advice to give to the hon. Gentleman is that there have been weeks in which to table amendments, and I would not look favourably on his suggestion at present.

None

Inquiries by approvals boards for England

Stephen Hammond: I beg to move amendment No. 73, in clause 24, page 22, line 23, at beginning insert Subject to subsection (8),.

Ann Winterton: With this it will be convenient to discuss amendment No. 74, in clause 24, page 22, leave out line 25.

Stephen Hammond: Welcome back to the Chair, Lady Winterton.
Clause 24 empowers the approvals board to hold inquiries. I envisage that those inquiries will be an important part of the work of the board. Members of the board will want to investigate the evidence provided to them by the local authority that is proposing the quality contracts scheme. They will want to examine any other representations made as part of the consultation process. They will also want to consult as widely as they consider necessary to reach an informed decision about whether to approve the scheme.
I hope, therefore, that my first substantive amendment to clause 24 will not prove controversial. Proposed new section 126C(4) provides that inquiries held by approval boards should be held in public. Proposed new subsections (8) and (9) provide that confidential commercial information should not be disclosed, which seems sensible to me. There is, however, a missing link, for it would be hard for the board to meet in public and discuss commercially sensitive information without disclosing such information. There may therefore be certain circumstances when it would not be appropriate for the board to meet in public.
My amendment would add the words  Subject to subsection (8) to the end of the provision that reads:
Any inquiry held by the board for the purposes of section 126 must be held in public.
The intention of the amendment, which I trust is not contentious, is to enable confidential commercial information to remain just thatconfidential. I do not think that the Bill will allow that to happen.
Amendment No. 74 also relates to the provision that any inquiries must be held in public. At the end of proposed new subsection (4), the Bill says:
This subsection is subject to any provision made by regulations.
I am concerned to probe exactly what sort of regulations might affect the boards ability to conduct its inquiries in public, other than those that would be tackled by amendment No. 73. Therefore, I look for guidance from the Minister on what regulations she is thinking of.

Rosie Winterton: Welcome back to the Chair, Lady Winterton. I hope that I can give the hon. Gentleman some reassurance here. The Bill already takes account of the need for commercial confidentiality in the circumstances he described. It allows for regulations to be made that might restrict public attendance at inquiries where appropriate. We have it in mind that that might be used to restrict members of the public from attending those parts of an inquiry that are concerned with confidential financial information. A similar provision to that which we envisage already exists in regulations on inquiries held by traffic commissioners.
The Bill will also make it a criminal offence to disclose protected information. We will be consulting on the draft regulations later in the year. I hope that that gives the hon. Gentleman some reassurance that the Bill covers his concerns and that he feels able to withdraw his amendment.

Stephen Hammond: I think the Minister has just said that protected information will cover commercial and commercially confidential information. That being so, will she clarify another point before I withdraw the amendment? What other reason might there be for an inquiry not being held in public, other than information being commercially confidential? Are there any other reasons that the Minister anticipates?

Rosie Winterton: I cannot think of many other reasons why there might be a need for confidentiality. However, no doubt when we consult, the experience that traffic commissioners already have of some inquiries that they have held might offer further enlightenment. At the moment, though, the main reason is commercially confidential information.

Stephen Hammond: I am grateful for the Ministers explanation, but I am still troubled by the fact that the subsection says
subject to any provision made by regulations.
However, I shall see what the Minister comes up with in the guidelines on this point. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Hammond: I beg to move amendment No. 75, in clause 24, page 22, line 28, at end insert
and shall supply a copy of that document to all the persons listed in section 125(1).
The purpose of the amendment is to explore exactly what prescribed manner might mean. When the approvals board plans to hold an inquiry, it will be required to publish a notice of inquiry in the prescribed manner. I want to ensure that the words in the prescribed manner ensure that all the people who are entitled to receive a copy of that notice receive it. It seems only logical that all people who are supplied with a consultation document should also be told about any inquiry relating to the proposed scheme. The list of people and operators includes local operators and various others, including the chief police officer.
I tabled an amendment, which I believe had some support from the Liberal Democrats, on extending the list of people to be consulted. Unfortunately, the Minister was not minded to accept it. The crux of the matter is that members of the approvals board must be given access to all the relevant information and the full spectrum of opinion before they come to their decision. 
At the moment, it is possible to conceive a scenario where a person or a group of persons or an organisation that had made a representation to the local authority objecting to the authoritys proposal to bring forward a quality contracts scheme might have done so as part of the consultation process. However, for whatever reason, the authority might dismiss that objection, push ahead with its process and pass it to the board for approval. There is nothing to ensure that the approvals board will necessarily know of the objectors. It seems to me that the board must be made aware of the objectors to the scheme, as well as the reasons for it. Therefore, those affected must be made aware of the inquiry.
My amendment, therefore, says that the board, in addition to publishing a notice of the inquiry in the prescribed manner,
shall supply a copy of that document to all the persons listed in section 125(1),
which is the provision detailing to whom the local authority must send a copy of the document.
I look to the Minister either to accept the amendment or to reassure me that all persons to whom representations are made as a result of the consultation procedure automatically get a right of hearing at the approvals board.

Rosie Winterton: The hon. Gentleman makes a fair point. It is obviously right that people, particularly someone who has objected to a scheme, should be informed of the fact that there will be a public inquiry.
I hope that the hon. Gentleman will accept that we want to cover that in regulations, rather than in the Bill. Given that assurance, I hope he will withdraw his amendment.

Stephen Hammond: I am grateful to the Minister for her assurance. Subject to seeing the regulations and ensuring that they specify that point, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Hammond: I beg to move amendment No. 76, in clause 24, page 22, line 31, leave out from to to as in line 32 and insert
such person or organisation as the board thinks fit,
(b) by such person or organisation.
Proposed new section 126C(6) will empower the approvals board to ensure that any costs incurred by the Secretary of State or by the board in connection with holding the inquiry are reimbursed. That seems to me to be well and proper. Oddly, however, such payments are limited in that the only person to whom they can be made is the Secretary of State. Given that costs may be incurred by the traffic commissioner chairing the board, other members of the board or, indeed, a third party organising the inquiry, why does only the Secretary of State stand to be reimbursed?
When a public inquiry is being organised by an independent approvals board, is it right that the Secretary of State should be the one reimbursed? In what circumstances does the Minister foresee the Secretary of State incurring costs in helping the board to arrange an inquiry in a particular area or case? Is that appropriate? Why is the Secretary of State incurring the costs? Those costs are more likely to be incurred by others. The board will organise and hold the inquiry; therefore, the board will incur the costs. The Secretary of State is not a member of that board.
The amendment is probing and it seeks to find out why the Bill is so worded. Why should other people not be entitled to reimbursement should they incur costs in the organisation of the inquiry?

Rosie Winterton: I am grateful to the hon. Gentleman for clarifying the purpose of the amendment, as we were slightly confused about what it is trying to achieve.
The purpose of the provision that the hon. Gentleman seeks to amend is to enable an approvals board to require one or more parties to contribute to the costs incurred by the Secretary of State or the approvals board itself as a result of holding the inquiry. Costs incurred by an approvals board will ultimately be funded by the taxpayer, which is why the Bill says that the costs will be paid back to the Secretary of State.
I will set out my objections to the amendment. First, as the Bill is drafted, an approvals board can require a person to contribute to the costs of the inquiry only if they are a party to the inquiry. It is unclear to me why the hon. Gentleman wants to widen that provision. Under his amendment, people not even involved in the inquiry would be required to contribute to the cost of it.
Secondly, the Bill states that parties to the inquiry might be asked to make a payment to the Secretary of State in respect of the costs incurred by the Secretary of State or an approvals board. Under the amendment, the costs incurred by the Secretary of State or the approvals board could be reimbursed to other parties. I am not sure why costs that are ultimately borne by the taxpayer should be reimbursed to anyone other than the Secretary of State.
Over and above that, there are objections in policy terms to the amendment. Its effect would be that one partyeither a bus operator or a local authoritycould be required to contribute to the costs incurred by the other party during an inquiry.
The problem with that would be that if, say, a bus operator knows that a local authority would have to reimburse his costs there is no incentive for the operator to keep those costs to a sensible level. Indeed, a disruptive operator might deliberately spend a great deal of money simply in the hope of frustrating the local authority which would ultimately have to meet those costs.
With that explanation, particularly in terms of why it says the costs would be repaid to the Secretary of State, I hope that the hon. Gentleman will withdraw the amendment.

Stephen Hammond: If I heard the Minister correctly, she is saying that the Bill as drafted uses the Secretary of State as the collecting point for costs whether they are incurred by the Secretary of State or the board of inquiry. My concern was that costs would be payable to the Secretary of State and not necessarily to the approvals board. However, given what the Minister has saidthat the Secretary of State is acting as the collection point which was my concernI beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 24 ordered to stand part of the Bill.

Clause 25 ordered to stand part of the Bill.

Clause 26

making of scheme

Norman Baker: I beg to move amendment No. 192, in clause 26, page 25, line 4, leave out subsections (3) and (4).

Ann Winterton: With this it will be convenient to discuss the following amendments: No. 113, in clause 26, page 25, line 1, leave out subsections (2) to (4).
No. 114, in clause 26, page 26, line 3, leave out
periods specified in subsection (1), (1A) or
and insert
the period mentioned in subsection.
No. 193, in clause 26, page 26, line 3, leave out , (1A).

Norman Baker: I will speak very briefly to the amendment as I intend to withdraw it in due course, but I wanted to get one or two comments on the record.
The proposal harks back to our long discussions on clause 23 and new clause 5, on which there will be a vote in due course. We identified various scenarios for improving on the quality contracts scheme, which Members discussed at some length last week.
The hon. Member for Manchester, Blackley and I set out three options. The proposal is a fourth; it would remove the Transport Tribunal from the process, thereby eliminating one of the hurdles that local authorities face. In my view it is the fourth best of the four options. The best option is the one set out in new clause 5. However, it is an option and I offer the Minister this opportunity to comment, having, I hope, reflected over the weekend on the strong views that were put to the Committee both by her colleagues and by me, and to let us know whether she is likely to recommend to the House on Report some changes to the quality contracts procedure, which as she knows know was severely tested last week in Committee.

Ann Winterton: I assure the hon. Gentleman that I have spent the weekend thinking of little else but him, his amendment and, of course, my other hon. Friends. However, we did have a conversation about it on Friday.
As I said previously, the real issue is to make sure we have a robust system that not only gives local authorities certainty about the way they can proceed, but also gives good protection in terms of judicial review. In light of that, I hope the hon. Gentleman will withdraw his amendment.

Norman Baker: Well, that did not tell us very much, did it? Suffice it to say that I will return to the matter on Report if the Minister does not, but in the meantime, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Stephen Hammond: I beg to move amendment No. 255, in clause 26, page 25, line 28, at end insert
(5A) In subsection (2), in paragraph (c) (maximum period for which scheme to remain in operation), for ten substitute five..

Ann Winterton: With this it will be convenient to discuss the following amendments: No. 116, in clause 26, page 25, line 30, leave out from operation to end of line 31 and insert
for must not be more than ten years substitute which may be for a fixed period or until such time as the authority or authorities that made the scheme determine that it should not remain in operation..
No. 256, in clause 26, page 25, line 30, leave out ten and insert five.
No. 117, in clause 26, page 25, line 34, at end insert
(2B) If the scheme is specified to be for an indefinite period pursuant to subsection (2)(c), then the authority or authorities shall, every time that the authority or, where there is more than one authority, each authority, reviews its local transport plan pursuant to section 109(1) (further provision about plans: England) or section 109B(1) (further provision about plans: Wales), review the effectiveness and appropriateness of the scheme and the extent to which the scheme continues to satisfy the criteria in section 124 (quality contracts schemes)..

Stephen Hammond: The amendments look to the next stage of what the Bill discusses. We have moved on from the approvals process to the making of the scheme itself. I have made it very clear that we support partnerships, but that we are very concerned about the impact and effect of quality contracts. I see some scope for improving what is to be on the statute book.
The first place where I detect that scope for improvement is in the length of schemes. The Transport Act 2000, which introduced quality contracts, specified that schemes should operate for no longer than 10 years. The Bill does not try to change that time period, although it does make provision in subsequent clauses for extensions of a scheme beyond its original duration.
I think the Bill should change the quality contract. The maximum duration should be brought down from 10 years to five years. The reason for that is simple: I remain unconvinced by anything I have heard from the Minister or anyone else that quality contracts will do anything to improve bus patronage. They bring back a significant element of regulation. It does not seem to me that in most areas there will be the astronomical amount of financial backing that the central Government have given to London, which is why the regulated market in London has flourished.

Graham Stringer: I have listened on a number of occasions to the hon. Gentlemans point about the difference between London and the rest of the country. What is not clear to me is the Conservative intention when the Bill becomes law. Are the Conservatives giving a commitment thatin the unlikely event that they ever become the Governmentthey will repeal the sections relating to quality contracts?

Stephen Hammond: I do not know where the hon. Gentleman has been for the last week, but I would have thought it highly likely that the Conservatives would be in government relatively soon.
Our position is clear. As we said on Second Reading, and I have already said in Committee, we are not convinced by anything we have heard that quality contracts will add to bus patronage. I tabled a number of extra amendments regarding quality contracts, which would have given the Government a chance to prove that they would do that, but so far we have heard nothing but assertion. We have seen no evidence. On that basis, our Front-Bench position is that when we come into power in a couple of years we will look very carefully at the system. At the moment, our intention would be to repeal quality contracts.

Norman Baker: In the meantime, will the hon. Gentleman be issuing instructions to Conservative councils not to use quality contracts?

Stephen Hammond: I would not presume to tell local councils how to behavenor, I assume, would the hon. Gentlemanso I will be doing nothing of the sort. It would be extremely wrong of me. Likewise, I assume that the hon. Gentleman will not be instructing local authorities to use the contracts. It is up to local authorities to make their own decisions.

Norman Baker: I am grateful for that reply. We do not instruct our councils. We are grass-roots up, but I was not sure that the same approach was applied by the Conservative party. Perhaps the word instruct was wrong. Will the hon. Gentleman be encouraging his councils not to take up quality contracts?

Stephen Hammond: I will be encouraging our councils to take up partnership schemes, be they voluntary or statutory.

Clive Betts: It is interesting to hear the hon. Gentleman say that he is not in the business of telling his councils how to behave. If he intends to repeal quality contracts, should he get into government, so that local councils do not have the option of adopting them, surely he is telling them that they will not be able to adopt quality contracts. That is exactly what he is doing.

Stephen Hammond: The hon. Gentleman is taking an extraordinary position. Central Governments of all hues pass legislation that has an impact on local authorities. Is he seriously telling us that central Governments should not pass any legislation because it would have an impact on local authorities? [Inter r uption . ] That is the logic of the hon. Gentlemans position. All the way along we have said we supported partnership and partnership routes, whether they be voluntary or statutory, and we will continue to support them. It has been a consistent position.

Clive Betts: I am grateful to the hon. Gentleman for giving way again. My position is not at all extraordinary. I completely accept that central Government have a right to propose legislation to the House, and that the House can pass it and, therefore, direct local authorities to behave in a certain way. However, I thought the hon. Gentlemans party wanted to devolve more powers and responsibilities to local authorities. Surely what he is saying about quality contracts is that if those powers were given to local authorities, he would want to take them away if he got into government. That is the reverse of the philosophical position his party is now adopting.

Stephen Hammond: The hon. Gentleman has already made that point, but as I have already told the Committee there is no evidence yet that statutory partnerships work. I want a chance to see them work. That seems the right road to go down. I prefer voluntary partnerships, and if they do not work there are powers for statutory partnerships.
I have made the point that most companies and most areas will not receive the financial backing from central Government that we have seen in the regulated market in London, which is why it has flourished. The inevitable consequence is that there would be potential for bus operators and local authorities not to increase bus routes but to cut them. What is more surprising is that if we look at what will happen under the Bill, some of the operatorsparticularly some of the smaller, independent operators, who provide a valuable servicewill face a real impact.
I draw the Ministers attention to the operator Trent Barton, which, as she may know, operates in Derbyshire, Leicestershire and Nottinghamshire and runs a fleet of about 270 modern buses on a network of local routes. In the companys response to the consultation on the Bill, it talked about the impact of the legislation, saying it may be forced to close or to reduce its size. Unlike larger bus operators, Trent Barton cannot necessarily move to another part of the country. The company mentioned some of the benefits it has brought to passengers, which it might not necessarily be able to do under a quality contract; for example, the Spondon flyer, which doubled the amount of bus usage in a particular suburb of Derby and was openly praised by the local authority in its local transport plan.
Trent Barton is an example of a smaller operator that has successfully brought investment, innovation and improvement to bus services in an area. There is a possibility that quality contracts will destroy that and if we cut out small, independent operators, we will cut out a potentially valuable source of bus services and patronage. Cutting them out for 10 years seems wholly arbitrary and detrimental. I accept that the figure of five years is somewhat arbitrary, but it is significantly better than the original figure of 10 years.

Norman Baker: I understand that the hon. Gentleman does not like the quality contracts process. Inevitably, it is inevitably quite complicated and relatively bureaucratic, as it needs to be to protect people, for the reasons he has given. If we have such a process every five years, will it not load up costs and make the whole business of quality contracts less desirable and attractive?

Stephen Hammond: There is that possibility, but local authorities are forced by central Government to do plenty of other things every year or every three years, which could put much greater costs on them. The proposal may or may not add extra costs, but there is a greater benefit, because quality contracts remain an unknown quantity.

Graham Stringer: I intend to come to some of those issues on amendment No. 127. The hon. Gentleman says that the amendment on five years is arbitrary, but is it not completely out of kilter with depreciation of a bus, and is that not genuinely related to innovation and to the length that a contract should beif we want new, better buses with access for the disabled, for example?

Stephen Hammond: I certainly accept that five years is out of kilter with the depreciation period of a bus, but equally one might argue that so is 10 years. I understand that the total depreciation period is between 15 and 20 years. I am not sure whether the hon. Gentleman is suggesting that we go to the total depreciation period.
Quality contracts remain an unknown quantity: not one exists anywhere in the country and we do not know what their impact will be. I and my colleagues fear the worst. No one has produced any evidence in their favour. We have heard assertionthat is all it isthat they will be significantly better than bus partnership schemes. Making assertions about 10 years is a brave and dangerous step to take. I shall test the will of the Committee on this matter.

Norman Baker: The hon. Gentleman began by decrying quality contracts. We understand that that is his position, but the amendment relates to how long they should run, rather than the concept of quality contracts, which, whether he likes it or not, we have largely dealt with. I fear that he was seeking to re-run the argument, rather than deal with how long the contract should run, and to undermine the concept of quality contracts by reducing the period to five years.
If there are to be quality contracts, which I support, there has to be a sensible time period. There is the question of depreciation of vehicles, referred to by the hon. Member for Manchester, Blackley; the question of the cost of setting the contracts up; and the question of making them work, rather than continually having to revisit them and prepare for the next round of bidding and processing. If bus operators and local authorities are continually looking to the next process rather than getting on with delivery, that will lead to a worse service. It is not sensible to approach this in such a way. 
The hon. Member for Wimbledon also raised the issue of small bus companies. I accept that that is an issue, as I did in earlier discussions. I raised the example of Norfolk Green to add to his example.
There is a very small chance that good small bus companies will be disadvantaged as a consequence of the introduction of quality contractsI raised the issue with the Minister earlierbut I happen to think that the likelihood of that happening is quite small and remote, so it is worth taking the chance. I accept that there is the possibility of it occurring, but if it does occur and the Norfolk Greens of this world have their bus routes taken away, it will not matter whether the period involved is five years or 10, because such companies will not come back. If they disappear, they will not hang around for five years waiting for the next quality contracts to be created.
If the hon. Gentlemans objective is to defend those companies, this, if I may say so, is not the right way to do it.

Ann Winterton: My hon. Friends and the hon. Member for Lewes are right to point out that the hon. Member for Wimbledon has said that he would abolish quality contracts if a Conservative Government were returned to power. That is quite clear. It is part of the undermining of the system of quality contractstrying to pare away at it, obviously with the ultimate threat that if a Conservative Government were to be returnedno matter what councils had done in the meantime to set up quality contracts in what they felt was in the best interests of their constituents and the people in their local authority areasquality contracts would be abolished.
From my discussions with Conservative councillors I have said it before, but I will say it againI think that there is a lot of enthusiasm for the approach that we are adopting in the Bill and that they will be severely disappointed that there has not been a change of heart on this particular policy by Conservative Front Benchers, even during debates in Committee.
We need to be clear. The Transport Act 2000 gives quality contracts 10 years to run. That is the current position, and we are not changing that in the Bill. What we are doing is allowing the tenders for contracts, or the contracts themselves, to be for 10 years rather five. That is because a quality contracts scheme is likely to involve a quite major reorganisation of local transport in an area, and a well-constructed scheme should form part of a long-term strategy to improve public transport. It is also likely to involve a high degree of investment, both by the local authorities in infrastructure and by the contracted operators in better-quality vehicles.
We believe that a 10-year time scale will often be necessary to justify such investment and to achieve the desired outcomes. It is possible for local authorities, if they so wish, to have a shorter period. Again, we have said that that is up to local authorities to decide. We believe in devolving decision making and trusting people at local government level to make the best decisions for their areas. The Bill is part of that, and that is why we are sticking to what was in the original Bill.
Frankly, as I have said, because of the investment necessary on both sides, we do not believe that a five-year maximum would be sufficient in the majority of cases. For those reasons, I ask the hon. Member for Wimbledon to withdraw his amendment.

Stephen Hammond: As I have said several times in response to the Minister, I find her unconvincing and not reassuring. Yet again, she has made assertions but produced no evidence on them. Until we hear evidence, I see no reason to change my position. I am open-minded, if the Minister would care to give me some evidence, but we have heard only assertion, so I wish to test the will of the Committee.

Question put, That the amendment be made:

The Committee divided: Ayes 4, Noes 10.

Question accordingly negatived.

Stephen Hammond: I beg to move amendment No. 206, in clause 26, page 25, line 43, leave out subsection (10) and insert
(10) Subsection (10) (power by order to vary the period mentioned in subsection (2)(b)) shall cease to have effect..
The amendment is designed to be probing. The original provisions on quality contracts in the 2000 Act gave the appropriate national authority the power to vary the date on which a scheme will come into operation. Clause 26(10) will amend that so that the national authority has the power to vary the date on which the scheme is made and any date relating to an appeal on such a scheme.
Given that we have just heard from several Labour Members who were anxious to jump to their feet to defend quality contracts as a localist measure put in place by local authorities, I am surprised that they are not now jumping to their feet to say, Why would the national authority want this power?.
Will the Minister say under what circumstances she envisages the Secretary of State interfering in such a localist measure in such a manner? Why does a national authority need the power to meddle in the scheme, which will have been proposed by a local authority and approved by an independent approvals board?

Norman Baker: The consultation stage, as I recall it, drew attention to a number of comments from individuals who were concerned that the time lag between a scheme being made and coming into operation was, at 21 months, unduly long. That was seen as a difficulty that had to be overcome if we were to see implementation of quality contracts. I see the Minister nodding, so she accepts the point that that is a long time lag. What steps has she taken to reduce that time lag and what should the time lag be in most cases?

Rosie Winterton: The amendment would remove what we believe is a very necessary flexibility to be able to amend aspects of the quality contracts scheme timetable through secondary legislation.
The 2000 Act provisions, as amended by the Bill, provide that a quality contracts scheme must be made not later than six months either after it has been approved or, in England, after any appeals against decisions of the approvals board have been finally disposed of. The Bill also continues a requirement in the 2000 Act that there must, in England, be a period of at least six months between the making of the scheme and its coming into force.
As the hon. Member for Lewes said, the period was originally 21 months. That was changed to six months through secondary legislation at the request of local authorities and others who felt that the original 21 months left too long a time lag. However, the original position of 21 months still remains in Wales, although that will be harmonised through the Bill.
Any of those periods can be varied by an order made by the Secretary of State or the Welsh Ministers. That gives flexibilities to shorten or lengthen the six-month period if, with the benefit of experience, that is considered necessary. In the past, there has been a change from 21 months down to six.
To remove the order-making power as the amendment suggests, so that it would not be possible to change those periods, would remove the flexibility that we want. The only way that the periods could be changed, if it was proved necessary, would be through primary legislation. As all members of the Committee know, passing primary legislation is a lengthy process.

Norman Baker: Will the flexibility that the Minister envisages allow the period to be extended beyond six months? In due course, that might have implications for the viability of particular bus companies, if the uncertainty went on for too long.

Rosie Winterton: Yes, it does include the possibility of lengthening the period. Here, we have in mind perhaps a situation where there are difficulties in ordering new vehicles or in constructing a bus lane. Over time, it might prove necessary to have that greater flexibility in the system.
Bus operators may fear that the order-making power might be used to reduce a limit to below six months, but it may be used to lengthen a limit if that is considered desirable. I assure the Committee that no changes will be made without full consultation.
In my view, it is necessary to have that flexibility in making quality contracts schemes and I ask that the amendment be withdrawn.

Stephen Hammond: I am grateful for that explanation. One moment we are being localist; the next, we are for national direction. The Minister wants the flexibility to have national direction at one moment and then to castigate everybody else if she does not consider them as localist as the next person. I want to look very carefully at what the Minister has just said and possibly to revisit the matter on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 26 ordered to stand part of the Bill.

Clauses 27 and 28 ordered to stand part of the Bill.

Clause 29

Extension of maximum period of quality contracts

Graham Stringer: I beg to move amendment No. 127, in clause 29, page 26, line 36, leave out subsection (3) and insert
(3) Subsection (2) is omitted..
The amendment continues the debate that the hon. Member for Wimbledon introduced and would make the length of quality contracts more flexible and potentially longer, in line with the process in rail franchising and that in Greater London.
There are two issues here andwith your permission, Lady Winterton, as we are speeding along this morningI will discuss the length of quality contracts and the scheme itself, which is related to this issue. Listening to what the hon. Gentleman said in proposing the previous amendment and looking at this amendment, we see that while quality contracts are a considerable improvement on what we have, they are by no means a perfect mechanism. There is a lot of evidencenot just in this country, but around Europethat quality contracts would and will improve the quality of bus services. However, there are problems, which members of the Committee will have seen with rail franchises and, indeed, the franchises for the tram system.
If a franchise is let to a private operator to achieve all the benefits of commercial operationresponse to the market, the innovation that the hon. Member for Wimbledon mentioned and investment that allows that innovation and response to happenthe contracts necessarily become front-loaded. The commercial operator will want to spend the money and get the return on it at the beginning, and towards the end of the contract there is deterioration.
The amendment says that the process should be in line with permissive EU legislation, which would allow 50 per cent. extension to the contractsthat is normal in rail franchising and in Londonso that they could be extended from 10 years to 15. There would be an immediate benefit in doing that in stabilising the whole of the public transport system that relies on buses. If a quality contract were coming to its end and the operator was unsure about retaining that contract, whether because they had not been very good or because there were aggressive competitors in the market, there would probably be less interest in it. However, that would be exacerbated if the scheme itself came to an end at the same time, so the marketplace would not know what sort of scheme was going to be in place.
We come back to the point, is what is good for London good for the rest of the country? It is assumed that in London the schemes for franchising buses go on and that when it comes to the end of the scheme in 10 or 15 years, the market will know what to apply for. What is envisaged in the Billthe scheme itself is covered in more detail in later clauses, but it is relevant to the amendment as wellis the scheme having to go back to square one and be looked at again. That seems disruptive and it will bring a lack of stability to the system.
The amendment says that it should be possible to extend 10-year franchises by 50 per cent., as is allowed under EU regulation. The stability of the process would be helped if the scheme was allowed to continue unless there was some very good reason that it could not, which could be picked up in the local transport plans.

Rosie Winterton: My hon. Friends amendment relates to clause 29. As I said earlier, the clause extends the maximum length of each individual quality contract from five years to 10. At present, while a scheme can run for 10 years, a contract can run only for five. We have responded to points made to us by local authorities and others that it is more appropriate for it to be able to run for the same period as the scheme.
I understand the points that my hon. Friend has made, but under the system that we propose a quality contracts scheme will replace deregulated services with a series of contracts and, at the same time, suspend the free market in the area. The task of setting up a regulated network from scratch, which is what we are talking about, is rather different from adapting an existing one, which is more the case that we have in London. That is why the Bill provides for a review point.
After the period for which the scheme is approved, which may not exceed 10 years, it must be reviewed. If the authority is minded to extend it, a further consultation must take place to ensure that it has delivered at least some of what was promised, and that a scheme is still relevant and likely to deliver more. If, however, the scheme is not intended to expand in scope and will not involve new areas or new bus services, it can go ahead without approval, although there will be an appeal mechanism in it. If it is going to expand, the approval of the boardor in Wales, the Welsh Ministerswill still be necessary.
The amendment would affect the length of individual contracts within a quality contracts scheme. The 2000 Act extends the contracts from five years to 10; the amendment would allow further extension. However, we consider that the best way forward is to set the contract length at the same length as the overall scheme. We believe that much can change in 10 yearswhether it is demand for services, travel patterns, technology and so on. It is not unreasonable to require authorities to review quality contracts schemes at least once a decade. If the duration of the scheme is to be limited to 10 years, the duration of individual contracts must be similarly limited.
I know that my hon. Friend the Member for Manchester, Blackley believes that there should not even be a 10-year quality contracts scheme duration, and therefore that it is reasonable to extend the contracts themselves. However, for the reasons I have set out, we believe it reasonable to ask local authorities to look at the schemes after 10 years to ensure that they are delivering what was promised and that if they are to continue they can do so without having to go through a whole approvals board if they are not particularly different. We believe that that is the right balance to strike, and in view of that I hope that my hon. Friend will withdraw his amendment.

Graham Stringer: I welcome the increase in the length of the contract from five years to 10, although I would quibble with the phrase removing a free market. One kind of market is being changed to another where there is off-road rather than on-road competition. It is important that we continue to make that point. What I do not think my right hon. Friend the Minister really addressedI am happy to give way now or wait until we consider this on Reportis the fact that the coincidence of the end of that period and the end of the scheme is bound to bring uncertainty and instability to the market. I would be grateful if my right hon. Friend reflected on that, either now or at a later stage. How could current operators and, potentially, new operators take decisions in their own companies to invest if they did not know what was going to happen? The coincidence of the end of the scheme and the end of the contract represents a serious point.
The second point is the length of the contract. As hon. Members on both sides of the Committee know, I am not the greatest advocate of EU regulationby and large, I think we are better off without most of itbut I do not understand why in the rest of the country there should be less flexibility and less application of European laws, including the ability to extend those contracts by 50 per cent., than is the case in London and within the rail franchising system.
Regarding my right hon. Friends final point, on which I ask her to reflect, I completely understand that this is a new scheme. The London scheme changed slightly over the period after privatisation. There had been a publicly-owned system and there was a relatively smooth transition to a franchise system, whereas in this instance we are moving from a very lightly regulated system to a franchise system. That, I accept, is a much bigger change within the market. I also accept that it may need to be assessed. What I do not necessarily accept is that this needs to be assessed at the end of 10 years. Why cannot it be dealt with while the scheme is going on? If there are failures or if extensions are neededas my right hon. Friend correctly points out, that might be the casethat might be dealt with in the local transport plans, which would be consulted upon.
I am happy to come back to those points on Report, but I think that there are real market issues. That is a different debate from the one about whether to accept quality contracts. If one accepts quality contracts, there is a real practical debate here about how to help the market to work to maximum effect.

Rosie Winterton: The 10-year time period provides a good opportunity to review the scheme itself and, if an authority had decided to let a contract for the full 10 years, to say what would be the new parts of a new tendering process. Running the two together would not necessarily bring instability but could provide a good opportunity to look at how the scheme is operating, to see whether it had delivered and whether there should be different specifications in a new tender process. The two might fall quite well together.
With regard to EU regulations, I understand that the Community regulation to which my hon. Friend refers recognises the difference between, for example, a design, build and operate system for a light rail system compared with a bus contract. There is a period of 15 years for rail contracts and 10 years for bus contracts. Community regulation does specify difference in the maximum.
I have listened to the points made by my hon. Friend but it is still within the local authoritys ability to vary either of the two periods if it wishes to do so. There is a maximum when an authority would be required to review the success of the scheme. If there were no major changes to the way the scheme was to be run it could go ahead without having to go an approvals board. I hope that reassures my hon. Friend.

Graham Stringer: It does, in parts. As I understand itI do not mean to be sarcasticthe London bus system, which does not have trams or trains, has the right under EU legislation to extend those contracts if it wishes. I do not see why that should be changed.
There is a genuine difference between us on assessment of how the market might respond to the ending of both the contract and the scheme at the same time. My right hon. Friend has been very helpful and open-minded in this debate and I ask her to remain so for further discussions on these practical issues before we consider the Bill on Report. They are not matters of principle but of making the scheme work, and on the basis that we can return to the matter on Report and that there will be ongoing discussion, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Stephen Hammond: As the Minister said, clause 29 has the effect of extending the maximum duration of the contract from five to 10 years by amending section 130 of the 2000 Act. As I said while we were considering amendments Nos. 255 and 256, I am unsure whether the move can be justified given that quality contracts are an uncertain beast at the moment. The ramification is that the clause and the succeeding clauses, far from extending the quality contracts rules from five years to 10, might in a number of cases extend the quality contract to 20 years. That is an extraordinary provision for something that is untried and untested. It creates an unnecessary restriction on the market and, therefore, I will be asking my colleagues not to support the clause.

Rosie Winterton: Once again, the hon. Gentleman is showing his complete hostility to the idea of quality contracts. As I have said, there is a review of the quality contracts scheme after 10 years. Yes, if it has not changed substantially, it can continue. We think that is the right balance to strike, but the hon. Gentlemanbecause he does not really believe in quality contracts in the first place is simply opposing the clause to illustrate more clearly than ever that Conservative Front Benchers are hostile to these ideas.

Question put, That the clause stand part of the Bill:

The Committee divided: Ayes 10, Noes 4.

Question accordingly agreed to.

Clause 29 ordered to stand part of the Bill.

None

Continuation of scheme for further period

Stephen Hammond: I beg to move amendment No. 214, in clause 30, page 27, line 48, at end insert
(i) a list of
(i) those people who have declared an objection to the continuation of the scheme, and
(ii) the objections declared by those people mentioned in (i)..
The amendment looks at the whole concern about extending quality contracts beyond their initial period. We have discussed the consultation process that a local authority must engage in if it wants to introduce a quality contracts scheme. I have argued that the consultation document should contain certain additional elements and be made available to a wider range of individuals and organisations.
I am glad to see that where a local authority wishes to extend a quality contract scheme, it must engage in a similar process of consultation: that seems only logical. My intention with the amendment is, as with my previous set of amendments, to ensure that the consultation procedure is robust and effective. Those who receive the consultation document, and are invited to respond to it, must be aware of all the facts about the proposed extension of the scheme. That is probably already adequately covered.
However, the consultation document is produced by the local authority, and the very production of the document is evidence that the authority thinks the extension would be a good thing. I am concerned, too, that the document should also contain the evidence or views of people who think that the extension would not be a good thing. They should be entitled to have their points of view expressed and understood by those who are consulted, so those points of view should be in the document. In that way, people reading the document would be able properly to assess and analyse the successes and failures of any schemes in place, and members of the Committee will know from what I have already said that I think there will be more concerns than successes. Nevertheless, unless the consultation document includes the views both of those in favour of an extension and of those opposed to it, the consultation process cannot be as fair and open as possible. I hope the Minister will reassure us that the document will be balanced, even-handed and able to contain the views of both sides.

Rosie Winterton: The clause and these amendments will introduce a new process to be used where a local transport authority wants to continue a quality contracts scheme beyond its initial approval period. This process would allow it to do so without having to make a new scheme. Under the current legislation, it is not possible to continue a quality contracts scheme in that way, and the authority would have to go through the full process of making a new scheme if it wanted to do so. The Bill would introduce a more flexible system, which will enable a lighter-touch approvals process to be applied depending on the extent of the changes. Under these provisions, if an authority wanted to extend a quality contracts scheme, it would be required to publish a consultation document reporting on the effectiveness of the scheme so far, as well as making a case for continuing it for a further period of up to 10 years. Where it is proposed that the scheme should not be expanded to cover additional services, the scheme will not need to be submitted for approval. This is, as I have said, a much lighter touch than exists under current legislation, which requires in such circumstances a whole new scheme to be made.
In my view, a consultation document should be drafted in impartial, neutral terms with the objective of seeking open views from any stakeholders with an interest in the proposal being considered. To include details about objections to the proposal in the consultation, including the identities of those who have objected, would cloud neutrality and, as a result, could unfairly influence responses to the consultation. I do not think that should be the objective of any consultation, whatever the issue being discussed.

Norman Baker: Will the Minister confirm that under the Freedom of Information Act 2000, any comments made in support of or against any particular proposal of the consultation document will in fact be available for public inspection?

Rosie Winterton: I gather that certain exceptions are applied. As I have said, however, the consultation is not supposed to be a summary of everybodys views. It is supposed to gather those views. Until the consultation process has been carried out, it would not be possible to have the objections, unless the hon. Gentleman means to go back 10 years to when the scheme was originally made. Again, I do not think that would make sense. The idea of the consultation document is to say, This is the view of what has happened in terms of the scheme, and this is why we want to take it forward. If there were an objection to its being taken forward, it could go through an appeal process. However, if the local authority wants to continue with the scheme, and if it is the same, with no new proposals for different services, it should be able to go ahead. The process gives the opportunity to set down why the authority thinks it should continue, and what has been achieved so far.

Norman Baker: On the consultation point, the image I had in my head was akin to a planning application where, if a planning application is made, it is possible for individuals to write in to say they are for or against the application. Those letters are on a public file and can be inspected by the public at large. I hope the Minister will tell me a similar sort of process will apply in this case.

Rosie Winterton: There would be a consultation document. If the scheme was coming to the end of its 10-year period, the local authority would set out why it believed it should go ahead with the scheme. If there are no new proposals in the scheme, and it is roughly the same as it was before, it does not need to go through the approvals process. It can be appealed against, but it does not need to go through the approvals board.
If somebody reading the document said, Well, I do not agree with that, I do not want the scheme to go ahead, I am going to appeal against it going ahead, it would go through that appeals process. That is the system that would be adopted. If the scheme was changing entirely it would need to go to the approvals board and through a similar process whereby individuals would write in saying, We do not believe that the scheme should go ahead, will you take our views into consideration?. The approvals board would see all those cases. That would be more of a consultation exercise but there could be appeals against it.

Stephen Hammond: I think I heard the Minister say earlier that her wish for consultation and the documents that set it out should be open, fair and balanced. I take the Minister at her word and look forward to that being the direction in the guidance, when it is set out, as to how the procedure might work. With that acceptance and reassurance from the Minister, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 30 ordered to stand part of the Bill.

Clause 31

Approval of continuation of scheme

Stephen Hammond: I beg to move amendment No. 215, in clause 31, page 28, line 45, leave out from authority) to applies in line 1 on page 29.

Ann Winterton: With this it will be convenient to discuss the following amendments: No. 216, in clause 31, page 29, line 2, leave out from one to end of line 3.
No. 217, in clause 31, page 29, line 4, leave out subsection (2).
No. 218, in clause 31, page 29, line 14, leave out subsections (3) to (10).

Stephen Hammond: Clause 31 provides the same approvals process that we have discussed previously. As I understand it, it is stating that the approvals process can apply to extensions as well unless they are deemed to be exempt extensions. That and the strong independent process of approval are vital and I am wary of circumstances in which they may be bypassed.
The clause sets out circumstances in which such an exemption would apply but the rules are somewhat complicated. If the Government believe that they are formulating an approvals process that does the job it is intended to do, can the Minister tell us why should there be exemptions from the process? It does not seem that there is any particular reason or benefit to the public validity of an approval or an extension that certain ones can suddenly become exempt from the process.
The approvals board is designed to be independent. It is a qualified group of individuals with the power to make decisions in the best interest of local people. That is the purpose of the board and that is what it should be allowed to do. I am, therefore, looking to the Minister to give us some clear indications of circumstances in which such exemptions might apply.

Ann Winterton: The amendments would move us back to the position where, in all circumstances when a local authority proposed to continue a quality contracts scheme beyond its initial period the scheme would have to be made again from scratch, with a full approvals process in every case.
We want to change the current legislation because it is not possible under that legislation for a quality contracts scheme to continue beyond its initial periodthe authority has to go back through the full process of making a new scheme. We want there to be a more flexible, lighter touch, which we are bringing in under the Bill.
Under the provisions, an authority that wanted to extend its quality contracts scheme would need to publish a consultation document reporting on the effectiveness of the scheme so far, as well as making the case for continuing it for up to a period of a further 10 years. The proposals would be subject to the same consultation procedure and approvals and appeals process as a new scheme, but with appropriate modifications and certain exemptions from the approvals process.
In particular, where it was proposed that the scheme should not be expanded to cover additional services, the scheme would not need to be submitted for approval. The new approvals process with certain modifications and exemptions would apply to any application to continue a quality contracts scheme beyond 10 years. We have set out the conditions that would need to be met if the scheme is to be exempt from this process and impose a requirement on the local authority to publicise any such proposal. Other than for exempt proposals the application would need the approval of the approvals board or Welsh Ministers. Only schemes that had achieved their stated objectives or were well on the way to doing so, and where there would be public benefit, would be likely to be approved.
We now come to the exemptions. Proposals in the draft Bill would have required every continuation scheme to go through the approvals process. However, one of the key functions of the approvals process is to ensure that the effect on deregulated services is properly taken into account. If a quality contracts scheme is already in force and will usually have been in force many years, as long as the scope of the scheme is not widened, there will be no such services to take into account. In those cases, there seems little point in submitting the continuation scheme to the approvals board or Welsh Ministers.
However, we accept that some authorities will want to modify the schemes when they continue them, either to adjust the boundaries to take account of road or planning developments since the existing scheme was approved or to vary the description of services that are excluded from the scheme or to bring in additional services. If any changes of that sort meant that services previously operating outside the scheme would be part of it, it seems appropriate for the approvals process to apply. That is a necessary safeguard because without it a local authority could greatly expand the scope of an existing scheme, making it virtually a new scheme, without going through the approval process.
In order for a continuation scheme to be exempt, two sets of conditions need to be satisfied. The first is that there is no increase in the geographical area, or only to such a minor extent that no existing bus services or additional local authority would be taken into the scheme. Any one of those conditions must be satisfied.

Norman Baker: Where the approvals process kicks in, in the circumstances described by the Ministerfor example, an extension to geographical areaI assume the approvals process would look only at the impact of any amendment rather than looking at the entire scheme again.

Ann Winterton: No, the scheme as a whole would be looked at in terms of the continuation process because in those instances it has reverted, and because it has changed it does not come under the continuation process.
As we said earlier, an approvals board is able to talk about modifications. I am sure that in those circumstances there would be a look at the scheme as it had been running and a look at the effect of the new geographical area in it. That would be quite reasonable. Otherwise, the current scheme would not be looked at all and it would simply be a new scheme starting. In those circumstances, where it was expanding, it would be quite reasonable to say that the approvals board looks at the scheme as a whole and at how it would continue as a whole. Otherwise, there would be two processesone the continuation scheme and one a new quality contracts scheme.

Norman Baker: Would the approvals process be able to take into account comments people had fortuitously taken the opportunity to make about elements of the scheme that would not in fact be affected by a geographical extension?

Ann Winterton: Obviously, if the scheme went through the entire approvals board process again, people would be able to make comments about the existing scheme. The continuation scenario would be that if the local authority issued a consultation document, people could appeal against it. If the scheme reverted to going through the whole approvals board process because it had changed, people would be able to make representations to the approvals board in the same way as previously.

Norman Baker: The point I am trying to get at is this: if it is deemed sensible to make a small geographical extension to the scheme and that triggers the process, I understand why it has to be looked at, but if the whole process or scheme can be looked at again, that is a disincentive to make that small geographical amendment.

Ann Winterton: Again, we have to strike the right balance between changing the current legislation, which requires any scheme to go through the approvals board process all over again, and having flexibility, so that if a scheme is extended outside the geographical area or there are additional services, the scheme can be considered as a whole. Frankly, the alternative is to have a continuation in one area and a new scheme in another area. It is obviously in a local authoritys remit to be able to do that.
The second set of criteria that come under the exemptions are that there should be no reduction in registered bus services previously excluded from the scheme. Both of those conditions must be satisfied for a continuation scheme to be exempt from the approval process. As I have said, that is the right way forward in striking a balance between the two processes. I hope that, in view of that, the amendment will be withdrawn.

Stephen Hammond: I think I heard the Minister say that, except for minor alterations, all alterations to quality contracts that are proposed as an extension will have to go through the approvals board. If that is so, I am happy with that reassurance, and on that basis I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 ordered to stand part of the Bill.

Clauses 32 to 35 ordered to stand part of the Bill.

Clause 36

Regulations about schemes

Stephen Hammond: I beg to move amendment No. 222, in clause 36, page 33, line 28, leave out paragraph (b).
Clause 36 is mainly uncontroversial and makes small amendments to the Transport Act 2000 that are consequential to changes made in the preceding clauses. As I understand them, they relate to regulations that can be made about quality contracts. The changes in the clause merely ensure that the regulations can be made about continuations as well. However, if I understand it correctly, subsection (3)(b) makes a change of somewhat greater substance. It provides that the regulations may be made by the appropriate national authority in addition to matters already listed in the act, namely
the procedure for determining such applications,
meaning, of course, the applications for approval of quality contracts. Why is subsection (3)(b) necessary? In what circumstances would those regulations be made, and what sort of regulations are they? The amendment is entirely probing.

Ann Winterton: The amendment would remove the regulation-making power in clause 36 that enable regulations to be made to set out the procedure for determining applications for the approval of quality contracts schemes or the continuation of such schemes. In a sense, the amendment would mean that an approvals boards actions would not be defined. The Government believe that it is important that the procedures for an approvals board should be clearly and legally defined, and that is the purpose of the clause. Subsection (3)(b) refers to the
procedure for determining such applications,
which deals with how the approvals board would receive applications. Removing it would mean that it would not be possible to set that out in legislation.
Subsection (3) is simply about the regulations and how the approvals process might work. Removing paragraph (b) would undermine the whole system of quality contracts and approvals boards, so I invite the hon. Gentleman to withdraw the amendment.

Stephen Hammond: The purpose of the amendment was to probe and to understand exactly what was meant and exactly what procedures were referred to. Given the Ministers reassurance and explanation, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 36 ordered to stand part of the Bill.

Clause 37 ordered to stand part of the Bill.

Clause 38

Guidance about quality contracts schemes

Stephen Hammond: I beg to move amendment No. 223, in clause 38, page 34, line 8, after authority, insert
, the Senior Traffic Commissioner, and the Public Transport Users Committee.
I regard clause 38 as slightly ominous. It deals with the whole issue of guidance and what may or may not be in guidance, regulations and the Bill. Proposed new section 134A of the Transport Act 2000 states:
The appropriate national authority may issue guidance concerning the performance by local transport authorities of their functions under this Part in relation to quality contracts schemes.
Inevitably, it goes on to say:
Those authorities must have regard to any such guidance.
This morning, the Minister has been helpful to our understanding of the Bill and its language, and I am sure that she will be helpful again now. However, I am unsure that she will be able to satisfy us why only the appropriate national authority will be able to issue the guidance.
I am not suggesting that every body should be allowed to issue guidance to which local authorities must have regard. That would clearly be unsustainable. However, but two bodies in addition to the appropriate national authority are competent and qualified enough to issue guidance: first, the senior traffic commissioner, whose functions include the registration of bus services and the overview of bus services in local areas; and, secondly, the public transport users committee, which is the dedicated passenger watchdog.
We should remind ourselves that the guidance is about the performance of local authorities in respect of quality contracts. As has been discussed, the stated aim of quality contracts schemes is to bring about improvements for bus users. Who better to judge whether that aim is being achieved than bus users themselves, through the organisation set up to represent them? Another stated aim of the quality contract is to ensure that other bus services will not be adversely affected. Who better to pass judgment in relation to that criterion than the traffic commissioner? 
Beyond the appropriate national authority, the senior traffic commissioner and the public transport users committee could offer useful, appropriate and constructive advice to local authorities when carrying out their function of regulating bus services, particularly in this part of the Bill. The thrust of the amendment is to say to local authorities that there are two other bodies beyond the appropriate national authority that could help them to formulate better policies.
I hope that the Minister will accept that the senior traffic commissioner and the public transport users committee are experts; they are independent and qualified and they should be able to issue guidance to local authorities on this matter, which rightly falls within their remit. That would help local authorities and ultimately, help passengers by encouraging local authorities to ensure, by having regard to what they have said, that the bus services for passengers will be better. I hope the Minister will accept the amendment.

Norman Baker: I have a simple question. The Minister has been telling us throughout our discussion of the Bill that we do not need to have everything written into it and we should rely on regulations or other informal means. I am struggling to understand why the clause needs to be included at all, given that the Minister or any national authority can issue guidance at any time it likes.

Ann Winterton: As has been stated, the Bill confers a power on the Secretary of State and Welsh Ministers to issue statutory guidance to local authorities about quality contracts schemes. Local authorities would be obliged to have regard to such guidance. The amendment tabled by the hon. Member for Wimbledon would empower the senior traffic commissioner and the public transport users committee to issue such statutory guidance, as well.
The guidance is intended to assist local authorities in deciding whether a quality contracts scheme is a realistic option for their area and, if it is, how they might introduce it. The Department has produced draft guidance, which is available to the Committee and is also on the Department for Transport website. We will be issuing a revised draft for formal consultation later in the year.
As far as involving the public transport users committee is concerned, the hon. Gentleman will no doubt be aware that the Secretary of State announced on 8 April that we intend to widen the remit of Passenger Focus, the rail watchdog, to include functions relating to local bus and scheduled coach services in England. That followed public consultation on how to deliver strengthened bus passenger representation. Subject to working up the details of conferring these official functions on Passenger Focus and further consultation, that means that the powers to establish a public transport users committee for England would not be taken up immediately. Retaining the powers in the Bill, however, gives us the flexibility to establish such a multi-modal committee in the future.
As I have said, we have already issued draft guidance and will revise it later in the year. Waiting for the bus component of Passenger Focus to be established so that it could help to write the guidance would delay the process of making guidance available to local authorities. Passengers might be best served by their passenger representative groups offering comments on individual quality contracts schemes when consulted.

Stephen Hammond: I hear the Ministers point about the potential delay, but surely that can be covered by issuing additional guidance?

Ann Winterton: Would that be different to the original guidance that has already been published? If we wanted to publish some guidance fairly quickly to be able to assist local authorities that wished to take up quality contracts, we would not like to then delay further. I will deal with the matter of consultation later.
It is not clear why the hon. Gentleman thinks that the relevant national authoritythe Secretary of State in England and the Welsh Ministers in Walesis not best placed to develop statutory guidance. The purpose of the guidance is to provide authorities with an overview of the legislation and to assist them in the development of schemes to ensure that they can work up realistic and well structured proposals where that is the right thing for their area.
To answer the question put by the hon. Member for Lewes, the reason that this provision appears in the Bill is that the guidance is statutory guidance. Local authorities will be obliged to have regard to it, which gives the guidance more weight. In any appeal against a scheme, the local authoritys actions and decisions will be considered in the light of the guidance. That is why it is included in the Bill in this way.
The traffic commissioners and the passenger representative body will look at quality contracts from a particular perspective. The traffic commissioners will have a major role in the approvals board for schemes, and a separate power is introduced in the Bill for the Secretary of State to issue guidance to that board. One of the strengths of the approvals board structure is that it provides an independent and impartial assessment of proposals to make a quality contracts scheme. As I have said before, we believe that it is important to preserve that independent role; we do not want it to be compromised by the senior traffic commissioner having the power to issue statutory guidance to local authorities. That is why we believe that the best method of issuing guidance is to have it prepared by the Secretary of State and the Welsh Ministers.
We also have concerns about statutory guidance potentially emanating from three different sources: the relevant national authoritythe Secretary of State or Welsh Ministersthe senior traffic commissioner and the passenger representative body. We think that that would be rather confusing for authorities, especially if they were expected to have regard to guidance that sought to represent the stance of very different bodies. 
That said, we will, of course, consult the traffic commissioners and passenger groups on the guidance and will continue to seek their views, particularly those of the traffic commissioners as they gain approvals board experience. I hope that that explains why we have taken our stance and that the hon. Member for Wimbledon will consider withdrawing the amendment.

Stephen Hammond: I listened very carefully to the Minister. I am not entirely satisfied with the explanation or the rationale behind the senior traffic commissioner not being involved in issuing guidance. I take the point that there may be some confusion, but I still think that that gentleman has a role to play. None the less, I wish to go back and have another look at this. I give notice to the Minister that I might raise this matter again on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 38 ordered to stand part of the Bill.

Clause 39

Quality contracts: application of TUPE

Stephen Hammond: I beg to move amendment No. 224, in clause 39, page 35, line 22, leave out from first is to end.
Let me say at the outset that this is a probing amendment and I think that the Minister will see fairly quickly where my argument is going. The clause is important because one of the great concerns about quality contracts is to ensure that staff will be treated fairly during and after the crossover period to the provision of services under a quality contract. The Minister knows that the clause provides that such a change shall be treated as a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006.
The clause has evolved during the Bills pre-legislative scrutiny and during its passage through the other place. The Lords had a very interesting debate on the matter, and the Minister will remember that the Government tabled amendments both on Report and on Third Reading in the other place.
As I understand it, one of the main issues arising from the original wording of the clause was that protection might only be available to employees taken on by a new employer that had won a quality contract. It would not provide protection for those in existing schemes and existing services transferred to a new operator. I think that amendment was moved by Lord Bassam, and it was right and proper.
On Report, it was also proposed that the incumbent operator be required to provide information to the local traffic authority about its current work force, which could be used as a basis for tendering. The successful tenderer would be obliged to employ that work force, provided they were willing or it was looking for new employees. I do not see anything wrong with that either.
Third Reading added a further element, which was to make it an offence for an operator to provide information that is false or misleading in a material way, if the person providing the information knows that it is false or is reckless as to whether it is. Again, I have no problem with the intent of that Government amendment. It makes sure that there is adequate protection.
What I am trying to find out through amendment No. 224 was not answered by Lord Bassam in another place on behalf of the Government, and I hope the Minister will be able to answer. It relates to the word reckless. In addition to providing false information, an operator will be breaking the law if it is reckless about whether that information is false. Will the Minister clarify the precise meaning of reckless with reference to this behaviour, how the definition of reckless behaviour will be set out in guidance, and who will set out that guidance? It was on that point, when asked directly, that her colleague in another place could not answer.

Ann Winterton: I understand the hon. Gentlemans questions and I hope I can be of some help. I will set out a little of the background and purpose of the requirement in subsection (5)(c).
In normal circumstances, when a local authority is providing a public service that is to be contracted out, it would, as part of the tender process, provide anonymised details of the members of staff who would be likely to be available for transfer to the contract on TUPE terms. Similarly, if a contract is re-tendered, the outgoing contractor can be obliged, as a contractual duty, to provide this information for the benefit of any other employer that wins the new contract. Without information of that sort, it would be very difficult for a new company to make a realistic bid for the work, as an important cost element would be missing from the calculation.
However, where a commercial bus service falls to be replaced by a contracted service, the existing operator would not be under any form of contract with the local authority that could oblige him to provide the information. Our TUPE provision therefore includes a regulation-making power under which operators could be placed under a statutory obligation to do so.
If all the operators in an area are keen to bid for contracts, and recognise that they could be winners as easily as losers, it is likely to be in their interest to provide the local authority with accurate information about staffing, but in some cases, that will not be so. An operator that has little prospect of winning a contract, does not intend to put in a bid, or is even so opposed to the whole idea of the scheme that he would like to cause mischief, may have no incentive to provide correct, complete and accurate information, and might not bother to check the facts and assumptions. It is also possible that an incumbent might provide deliberately false information to mislead competitors into bidding higher than necessary, either with the prospect of undercutting them, which would obviously be fraudulent, or simply with the hope of wrecking the scheme by making it unaffordable. The offence could therefore cover a wide variety of behaviours, from mere carelessness to deliberate attempts to deceive. It would be for the courts to determine the severity of the behaviour and the appropriate penalty, if any, on a case-by-base basis.
If a court is satisfied that an operator simply made an innocent mistake, it might decide not to impose any penalty at all. However, there could be instances where it is clear that an operator has not correctly represented the facts available to him, but it is difficult or impossible to prove a deliberate intention to deceive. That is where the question of recklessness becomes important, for if it were necessary to prove knowing deception beyond reasonable doubt, many negligent or irresponsible operators would go unpunished.
As with all criminal offences, the purpose is to deter rather than to punish. A responsible or prudent operator, weighing up all the odds, is not likely to behave in such a manner that could lead to a criminal prosecution, but if there were no obvious remedy in criminal law, the temptation to cheat might well be too great. I hope that explains that explains the thinking behind the term recklessness and that the hon. Gentleman will withdraw his amendment.

Stephen Hammond: I want to probe the Minister a little more, because it seems to me that all the circumstances she described were covered by the fact that it is an offence for an operator to provide such information that is
false or misleading in a material particular.
I understand entirely what she is trying to cover, but it is already covered by that provision. What she is saying is that in this situation, recklessnessthe test of which we have discussed under previous Billsis a lower test of deception. Is that what she is saying to us?

Ann Winterton: It is a failure to take due care to provide accurate information. That is the difference between a deliberate intention to mislead and not taking due care to provide accurate information.

Stephen Hammond: The problem with what the Minister is saying is that someone could be reckless without any intention to mislead. The Minister has spoken about an intention to mislead, and that is already covered. I am still not clear that reckless is anything other than a lower test that might catch a number of people who may have provided false information, but did not necessarily intend to do so and had no intention to deceive.
I hope that the Minister will ensure that in any guidance she produces she gives a very tight legal definition to the word reckless, because I think that the provision is open to an extraordinary number of misinterpretations. I am glad we have had the chance to explore it today; I hope the Minister will take on board my concerns about the meaning of reckless and that she will consider tightening the definition to avoid unintended consequences. For now, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Ann Winterton: With this it will be convenient to consider new clause 8Quality contracts: application of TUPE
(1) After section 134A of the TA 2000 insert
134B Quality contracts: application of TUPE
(1) Where subsection (2) applies, the cessation of the provision of local services to which a quality contract relates by one person and the commencement of the provision of those services by another (the new operator) shall be treated for all purposes as a relevant transfer within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (whether or not those Regulations would apply apart from this section).
(2) This subsection applies where, immediately before the date of the making of a quality contract, one or more persons were employed by a person other than the new operator in the provision of local services in the area to which the relevant quality contracts scheme relates (the old operator).
(3) The date on which the relevant transfer shall be deemed to take effect is the day on which the quality contracts scheme is made.
134C Quality contracts: compliance with guidance
(1) Where section 134B(2) applies, a local transport authority, in making a quality contract scheme
(a) must deal with matters affecting the terms and conditions of employment of the employees of the old operator as at the date of the relevant transfer, or the arrangements for their pensions, in accordance with any directions given to it by the appropriate person;
(b) shall comply with guidance issued to it by the appropriate person on matters relating to the terms and conditions, or arrangements for their pensions, of the employees of the old operator as at the date of the relevant transfer;
(c) must provide for the involvement of recognised trade unions in the tender preparations and the evaluation process in accordance with any guidance issued by the appropriate person;
(d) shall comply with guidance issued to it by the appropriate person on matters that must be taken into consideration in the award of a quality contract, which shall include any earlier failure to comply with the safeguards provided for employees under these provisions, including those contained in the Transfer of Undertakings (Protection of Employment) Regulations 2006.
(2) In subsection (1), references to employees of the old operator are references to persons to whom section 134B(2) relates.
(3) The date of the relevant transfer referred to in subsection (1) shall be determined in accordance with section 134B(3).
(4) The appropriate person shall be the Secretary of State.
134D Quality contracts: pensions
(1) The appropriate person shall exercise his power to give directions under section 134C(1) so as to secure that where a local transport authority concludes a quality contract with the new operator, it does so on terms
(a) that provide for any employee working on services governed by a quality contract to be eligible to join the Local Government Pension Scheme;
(b) that, for those employees who are not members of the Local Government Pension Scheme, otherwise require the new operator to secure pension protection for each transferring employee;
(c) that, so far as relating to the securing of pension protection for a transferring employee, are enforceable by the employee.
(2) For the purpose of subsection (1)
(a) transferring employee means an employee whose contract of employment becomes, by virtue of section 134B(1), a contract of employment with the new operator.
(b) pension protection is secured for a transferring employee if after that change in his employer he has, as an employee of his new employer, rights to acquire pension benefits and those rights
(i) are the same as, or
(ii) under the directions count as being broadly comparable to or better than,
those that he had as an employee of the old operator.
(3) The appropriate person shall exercise his power to give directions under section 134C(1) so as to secure that where
(a) a quality contract between a local transport authority and an operator (the incumbent operator) governs the provision of services by an operator;
(b) the local transport authority concludes a subsequent quality contract under a quality contract scheme with an operator (the subsequent operator) other than the incumbent operator; and
(c) the application of the TUPE Regulations results in one or more employees (transferring employees) of the incumbent operator becoming employed by the subsequent operator in relation to its operation of the subsequent quality contract;
the local transport authority concludes the quality contract with the subsequent operator on terms satisfying the requirements of subsection (4).
(4) Those requirements are that the terms
(a) provide for any employee working on services governed by a quality contract to be eligible to join the Local Government Pension Scheme;
(b) require the subsequent operator to secure pension protection for each transferring employee;
(c) that, so far as relating to the securing of pension protection for a transferring employee, are enforceable by the employee.
(5) For the purposes of subsection (4) pension protection is secured for a transferring employee if after that change in his employer he has, as an employee of his new employer, rights to acquire pension benefits and those rights
(a) are the same as, or
(b) under the directions count as being broadly comparable to or better than, those that he had as an employee of the old operator.
134E Quality contracts: consultation
(1) The appropriate person shall exercise his power to give directions under section 134C(1) so as to secure that where a local transport authority is seeking to introduce a quality contract scheme or to introduce a quality contract with a new operator, it will, at the earliest opportunity, consult with recognised trade unions as to the tender preparation and evaluation process.
(2) The appropriate person shall, in further exercise of his power to give directions under section 134C(1), provide guidance to local transport authorities contemplating the award of a quality contract with a new operator as to the matters that shall be taken into consideration, which shall include any earlier failure to comply with the safeguards provided for employees under these provisions..

Graham Stringer: To refer back to the previous debate, a wide variety of bus operators operate in the private sector in this country; some of them have the greatest integrity and provide a good service, and some of them are cowboys. It is as well to be prepared for reckless intentional and unintentional behaviour, given the statements of Brian Souter, who said that he would withdraw all services if he lost a contract, leaving the people of South Yorkshire without service. That is the real world in which we operate.
New clause 8 deals with how TUPE could apply. In one sense, TUPE normally applies to a business or occupationgrass cutting, or whateverwhich continues, and the employees are protected doing a similar job with a new company. That could happen in the bus industry. If a bus operatornot Stagecoach, but some operator with integrityapplied for a quality contract, lost it, and carried on its operations until a transfer of undertakings, its employees could transfer to a new bus company if there was an exact match between the previous scheme and the new scheme.
I suspect that that situation will be rare indeed, and that two things will happen. There will be people such as Brian Souter, who take their bat and ball home, damaging the service. Protection is needed for employees in that situation. There will also be confusion, which I suspect will apply in all metropolitan areas where a small number of bus companies and one or two large bus companies operate across boundaries. The purpose of the new clause is to protect employees who operate services in such areas by allowing them to transfer to the new operatorthe winner of the contract. It also provides that if such people are contracted to provide public services, they should be able to join and have the benefit of the local government pension scheme.

Ian Stewart: First, I declare that I am a member of the union Unite. I spent 20 years as a regional officer for one of the unions that merged into Unite, the Transport and General Workers Union.
Trade unions are needed to protect vulnerable workers. Workers and their families are vulnerable in times of redundancy and uncertainty. New clause 8 would provide protection for bus workers, security of employment and pensions for bus workers employed in an area that becomes subject to a quality contract. Proposed new sections 134B, C and D of the Transport Act 2000 are intended to strengthen the application of TUPE and allow trade union involvement in the quality contract process. Proposed new section 134B would protect the pensions of bus workers who transfer to a quality contract.
There are three hurdles that local and transport authorities must cross before a quality contract is made. Quality contracts will give specified areas such as routes, timetables and fares to local authorities. That power would be welcomed by my constituents in Pendlebury, Swinton, Eccles, Irlam and Cadishead, and by people throughout the country. Once the three hurdlesconsultation to determine whether people want a quality contract for their area, approval from traffic commissioners and, should an operator not agree about the contract, an appeal to the traffic commissionersare cleared, an operator under a quality contract effectively becomes a monopoly provider. Although that type of regulation of bus services will result in greater control over the services than is possible under complete deregulation, which is the system outside London, important employment matters need to be dealt with. That is the purpose of new clause 8.
One clear benefit of quality contracts is that once one is in place there will be stability of bus service provision andI hopeof employment. The difficulty, which the Bill has not yet adequately addressed, is in ensuring stability of service and employment during the transition to quality contracts. Unless protections are forthcoming, the process of introducing quality contracts has the potential to result in significant redundancies among bus workers, as my hon. Friend the Member for Manchester, Blackley mentioned. That is surely not what the Government intend to result from what is clearly a good-news measure. Fortunately, the Government will, I hope, table their own amendments either in Committee or on Report.
The potential threat to jobs stems from the fact that there is no legislation providing for staff transferring from a wholly private companyany bus operator outside London, for exampleto a company regulated through quality contracts. Under the current arrangements, therefore, there is nothing to stop service operator employers terminating the service on learning of the intention to introduce quality contracts. There is nothing, apart from the 56-day notice requirement, to stop such a service provider simply walking away from the service in question at any time.
The intention of proposed new section 134B is, therefore, that persons being transferred to quality contracts will come under the provisions of TUPEthe Transfer of Undertakings (Protection of Employment) Regulations 2006whether TUPE applies or not. The proposal is that TUPE protection should apply as early as possible and should be assumed to run from the date on which the quality contract was made. The provision would give the entire protection afforded under TUPE to all cases in which the introduction of quality contracts meant the transfer of employees from one employer to another. That implies that variations to terms and conditions, and/or dismissals arising by reason of the transfer, would be void and/or rendered automatically unfair, with liability vested in the transferee. That protection would relate back to any prior changes or dismissals made by the transferor, provided that they were made by reason of the impending quality contract.
Importing the protections of TUPE would ensure that the transferee had an interest in the continued employment of the staff in question and in the protection of their terms and conditions, given that it would stand to pick up any liability for dismissals and so on relating to the quality contract.
The new clause would not only improve on the Governments clause in relation to when TUPE should apply; it would make an important improvement with respect to which people it should apply to. Proposed new section 143B provides for TUPE to apply to one or more personsthat is, all workers involved in the operation of bus services in the area to which a quality contract scheme related would transfer to the operator who won the quality contracts bid. That would provide operators with a disincentive to run down resources, with the consequent redundancies and effects on passenger services. It would also create a level playing field for operators that tendered, because they would all understand the possible TUPE consequences. The information and consultation provisions of TUPE would apply, so those who tendered would understand where they stood and what the proper employment costs were.
The importation of TUPE might not, however, address the concern that former service operators and employers could simply terminate the service early on learning of the intention to introduce quality contracts. I would therefore like local transport authorities to have the power to act as providers of last resort in that respect. Proposed new sections 134C and 134E would mitigate such an effect by providing local authorities with a sanction and allowing them to take such behaviour into account when awarding future quality contracts. Similar practices are provided for in other local government contracts, such as the code of practice on work force matters in local authority service contracts.
The new clause provides further protection for the work force by allowing for consultation with trade unions, and for trade union involvement in the tendering preparations and the evaluation process in accordance with any guidance issued. That would allow, at an early stage, the employment implications of introducing quality contracts to be fully factored into the preparation of invitations to tender and into consideration of whether bids would adversely impact on employment.
I turn to the serious issue of pensions. The new clause highlights the aspiration of trade unions and workers that bus workers who transfer to quality contracts should be eligible to become members of the local government pension scheme by virtue of the fact that they will be employed under a local government contract. That would not only provide them with obvious benefits, but tackle one of the biggest challenges facing the bus industryhigh staff turnover and poor recruitment and retention. All the evidence has shown that a secure and fair pension secures stability in employment.
Furthermore, the new clause would protect the existing pension benefits of employees who transferred to a quality contract. That is necessary because TUPE does not provide full protection for existing pension benefits. I therefore hope that the Government will amend the Bill to ensure that bus workers who transfer from the deregulated market to a quality contract have their pensions protected. As the Conservative Front-Bench spokesman, the hon. Member for Wimbledon, said, the proposal received cross-party support during the Lords debate. The Government have also given a commitment to give serious consideration to providing such protection.
Pension rights and benefits are not protected by TUPE. Occupational pension schemes are not transferred by reason of a relevant transfer. Sections 257 and 258 of the Pensions Act 2004 require that where there is a relevant transfer within the meaning of TUPE, a transferee must offer a transferring employee the opportunity to participate in an occupational pension scheme following the transfer if they were eligible to participate in such a scheme before the transfer. The new scheme must meet a minimum statutory standard, but it need not be as favourable as the scheme provided by the transferor.
The amendments tabled by Lord Rosser in Committee in the Lords would have had a beneficial effect on protecting pension rights. When the Government responded on Report, they recognised that that was an important issue and were sensitive to the fact that pensions should be properly preserved. The need to protect existing pension benefits attracted cross-party support in the Lords.
The Government have previously introduced legislation to protect existing pension benefits in other reorganisations of the transport sectorthe privatisation of British Rail and the public-private partnership for the London underground, for example. The Department for Transport and the Department for Communities and Local Government have, as I understand it, recognised that pensions protection is important not only for employees affected by quality contracts, but for companies, as it provides a level playing field.
Will the Minister table an amendment on Report to protect existing pension provision? I hope that those two issues, which can be among the most devastating parts of a familys lifethey affect not just the workers, but the whole familywill be addressed and that this good legislation, which is good news for passengers, will also be good news for workers.

Ann Winterton: I am extremely grateful to my hon. Friends for their explanation of their new clause. As they said, substantial improvements were made to the Bill in another place to ensure that some of the concerns about the potential effect of quality contracts schemes on bus workers have been addressed.
In preparing those improvements, we wanted to ensure that there was the right degree of protection for workersin particular, by ensuring that the TUPE regulations apply while also ensuring that we do not prevent quality contracts schemes from being a realistic option for local authorities. I appreciate that the period of transition to a quality contracts scheme may not be easy for local authorities to manage. There are some measures that we can take in regulations to help with that. In particular, there is already a power to change, in specific circumstances, the period of notice that an operator must give before he may stop running existing services. Increasing that notice period during the transition to a quality contracts scheme might make a substantial difference, giving local authorities more time to make plans for filling any gaps in service that might arise.
The Bill also provides a power to make regulations modifying or disapplying the usual tendering requirements that apply when a local authority wishes to enter into a subsidy contract with a bus operator. There may be scope within the constraints of EU law to make some changes that streamline the process to give authorities a better opportunity to fill short-term gaps in service provision during the transition to a quality contracts scheme.
I can assure my hon. Friendsparticularly my hon. Friend the Member for Ecclesthat we have had quite detailed discussions with the trade unions and with some members of Unite, and I pay tribute to the work of the all-party group in pressing those cases. The discussions with the trade unions have been fruitful and led to some of the changes that we made in the other place.
With respect to the changes to the regulations modifying or disapplying the usual tendering requirements, I would like to consult on the proposals for regulations in those areas later in the year. I can assure my hon. Friends that I will involve the trade unions in those discussions.
In relation to the application of TUPE during the transitional period, my hon. Friend the Member for Eccles expressed very strongly the points that were made during some of the discussions with the trade unions. In the light of his arguments, I am prepared to consider further whether we can move in the direction that he and my hon. Friend the Member for Manchester, Blackley seek.
Important questions were raised about the degree of pension protection that should be afforded to bus workers. Difficult issues need to be considered here, such as the potential costs to local authorities. I will have to give the matter a good deal of further thought. The Minister for Local Government has been involved in some of the discussions. He and I have written to Jack Dromey of Unite regarding the agreement that a quality contracts operator will be eligible to apply for admitted body status, but, as in other local government contracts, there will not be an automatic right to join. The decision on whether to join will rest with the operators. I have had discussions about that and they will continue.
The new clause would also ensure that trade unions were duly engaged in the process of moving towards a quality contracts scheme. It is right that trade unions should be consulted when a local authority is working up proposals to make quality contracts schemes. The obligation on local authorities to consult appropriate persons on proposed schemes is already comprehensive and includes a general requirement to consult
such other persons as the authority or authorities think fit.
I cannot imagine a situation in which representatives of the appropriate trade unions would not fall into those categories. I am happy to reassure my hon. Friends that that is something we will consider reinforcing in the statutory guidance.

Ian Stewart: Will my right hon. Friend ponder on the distinction between when a contract is made and when it is implemented? Will she also be mindful of the fact that we are keen for her to understand that we want the protections in place when the contract is made?

Ann Winterton: As I said, those are all matters on which we hope to give some reassurance.
We were also asked what we will do about bus operators that fail to provide the employment protection to which employees are entitled. It has been suggested that we should specify it in the Bill that such failure should be taken into consideration when that operator bids for other quality contracts in the future. I have some sympathy with the suggestion made by my hon. Friends, who seek to ensure that operators who successfully tender for quality contracts have a good record in honouring their commitments to employees. However, I am not convinced that the matter should be dealt with in the Bill itself.
Obviously, when a local authority is considering tenders for quality contracts, it must take into account a wide range of factors, not least the reputation and standing of the operator submitting the bid. The authority must also act in accordance with procurement legislation. Where such legislation applies, it specifies the criteria on which a contracting authority either must or may reject a tender. Obviously, the appropriate procurement legislation is the right place for such restrictions. I think it would wrong for us to apply different restrictions in the Bill.
That said, I am prepared to consider whether it would be appropriate to include references on that point in the next draft of the quality contracts scheme guidance. I am certainly happy to explore that further.
I hope that I have indicated a number of steps that we might be able to take in future regulations to help to manage the period of transition to a future quality contracts scheme. I will very carefully consider the points made about the application of TUPE during the transitional period and the need to secure a fair degree of pension protection. While I cannot guarantee it, I am happy to see whether there is anything that we need to bring back on Report with regard to this and also to look at regulations and guidance in relation to some of the other points that have been made. I hope that, with those reassurances, my hon. Friends feel able not to press their new clause.

Question put and agreed to.

Clause 39 ordered to stand part of the Bill.

Clause 40 ordered to stand part of the Bill.

Clause 41

Competition scrutiny of functions and agreements relating to buses

Stephen Hammond: I beg to move amendment No. 231, in clause 41, page 36, line 13, at end insert
(c) agreements between two or more local bus operators relating to bus services..
A large number of bus services up and down the country are being revised as a result of voluntary partnership agreements between a bus operator and the local authority. These are not statutory quality partnerships yet; they are not affected by those. As I have said many times, voluntary partnerships are the best way to move forward. We have seen a number of excellently performing bus services. Any provision that encouraged such partnerships would have the support of my party. For that reason, I welcome clause 41, as did my hon. Friend the Member for Chipping Barnet (Mrs. Villiers) on Second Reading.
Clause 41 addresses the scenario in which bus operators and local authorities want to form a voluntary agreement for the benefit of the travelling public but are constrained by competition law, going through some of the competition tests. While I understand and appreciate that there has been a huge amount of relatively extensive consultation on this matter, there are one or two things on which I wish to probe the Minister.
Schedule 2, which we will discuss later, introduces the new competition test. Any agreements that are subject to that competition test will become an exemption from the relevant elements of competition law. The purpose of the amendment is to explore further the issue that was raised in another place. Lord Berkeley tabled an amendment that would have extended the scope of the competition test such that it applied to agreements between two operators. In other words, it would have allowed two operators to have an agreement without being subject to some of the competition law and not have the involvement of the local authority if it were proven to be helpful to bus patronage. The gist of my amendment is not dissimilar.
There are situations in which operators might wish to enter into agreements relating to bus services that would definitely benefit bus passengers. An obvious example might be timetable co-ordination. If two operators were discussing something that could clearly be of benefit to passengers, that should not be hindered by competition law.
The clause was amended in another place by means of a Government amendment. That represented some progress. What I am unsure about is whether that amendment covers an agreement of the sort that I have mentioned. Schedule 10 of the Transport Act 2000, as amended by the Bill, sets out the competition test and its application to voluntary partnerships and other agreements. I would like to know whether the Government amendment covers two operators discussing somethingparticularly timetable co-ordinationthat would be to the benefit of bus passengers.

Ann Winterton: The amendment would extend further the new competition test that will apply only to voluntary partnership agreements and certain agreements between bus operators. Through the changes that we are making to the competition test, we have tried, for example, to allow two operators to agree to co-ordinate their timetables to provide even patterns or services that connect with each other. That was in response to representations received from local authorities and bus operators about obstacles in the way of them working in partnership, through voluntary partnership agreements, and agreeing with local authorities on improvements, in the best interests of passengers.
When the Bill was introduced in another place, the new competition test applied only to agreements between one or more bus operators and one or more local authorities. However, the Government were persuaded to extend it, so it now applies also to certain agreements between operators only, provided that the local transport authority has certified the agreement as meeting the necessary requirements, which are that the agreement is in the interest of persons using local bus services in the relevant area and does not impose unnecessary restrictions on the operators concerned. It may impose only restrictions necessary to achieve what are referred to as the bus improvement objectives. Those objectives are identical to those used to assess whether potentially anti-competitive measures in a quality partnership scheme may be justified.
As I said, those amendments were made in another place. I think that bus operators were pleased with the changes, as too were the Campaign for Better Transport and local authorities. Furthermore, it is right to put on the record my thanks to the Office of Fair Trading for its help in preparing the provisions. However, my problem with the amendment is that it would allow bus operators to come to an agreement without the local authority having certified that it meets the requirements that I set out. Such an agreement should not be allowed unless the local authority agreed that it would improve public transport in the area and that it was to passengers benefit.
I appreciate that the amendment is probing and aimed at finding out the reasons for the changes made in another place, which further extend the requirement. However, we do not believe that agreements should be made without the local authoritys endorsement and certification.

Stephen Hammond: I am grateful to the Minister for her explanation, and I can certainly see the thrust of her argument. I shall consider what she said, particularly on local authority certification. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

It being One oclock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four oclock.